Welcome to the Vitus Capital Blog!
Notes to myself, possibly of interest to others.
-- Bill Northlich

Wednesday, August 21, 2013

In which Vitus gets carried away by the speciousness of an alleged pundit

In response to a short video at Barry Ritholtz' site entitled Dylan Grice: Who pays for the criplling US Debt?

Mr. Grice does not know that the 1% did not build the roads and bridges. The people who built the roads and bridges were in large part the 99%, through their labor and/or their taxes. So his cute story does not hold, even a little bit.

Grice implies the vocal 1%, his "other side", have a valid complaint of... impoliteness?... against a public they rip off for a living when that public presumes to object to being ripped off.

Who are these rippers? Banks. "Health" insurance companies. Mitt Romney. Almost President Romney will say his Private Equity company helped "those people" by right-sizing businesses, making the businesses more profitable, thus enabling them to hire more people and grow the county's GDP in the bargain. This description, in archetypal conservative framing, is the rankest of rent-seeking happy talk. In point of fact, Private Equity is in the business of extracting money from real businesses who build useful products or provide useful services. Sometimes the target survives; sometimes a few people are hired, but that's utterly ancillary to the process. PE is agnostic to anything but their "business" which is to extract money.

BR even had a take-down of PE a while back, providing evidence that PE would not be a business at all were it not for the government, which pays PE-types for their quasi-criminal activity through "carried interest", a Rentier-sponsored cyst on the tax code which allows PE executives to pay almost no taxes, ie, allows them to be paid by the government. And as BR noted, investors in, as opposed to principals of, PE get a lousy deal, achieving on average the return of the S&P with vastly more risk.

Mr. Grice apparently thinks that two sides of a controversy can be of equivalent moral and legal standing so long as each side has a point of view. I would have hoped for, well, something a bit less specious from someone featured on BR's blog. Mr. Grice, a frequent contributor to Zero Hedge, warns that the debt is out of control, implying that of course that is the fault of "those people" (rich people, doncha know, would not need to run up the debt; it was all run up to give free lunches to "those people". Oh, roads and bridges too.), and so "those people" must sacrifice to pay it back.


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